Professor Richard Holden said that the Australian government must find a way to boost productivity or risk a recession.
This warning highlights a systemic vulnerability in the national economy, where overall growth may mask a decline in the actual standard of living for individual citizens.
Speaking during an interview on News24 with host Chris Kenny, the UNSW Business School professor noted a troubling trend in economic data. He said that 11 out of the last 15 quarters have shown negative growth per person, or per capita [1]. This persistent decline suggests that while the economy may be growing in aggregate, it is not keeping pace with population increases.
Holden said, "It is a worry, but I think we’ve had something like 11 out of the last 15 quarters we’ve had negative growth per person, per capita."
To counter this trend, Holden said the government must focus on the supply side of the economy. He said that raising productivity growth is the only sustainable way to avoid a downturn, a goal he said the government discussed again this Tuesday.
"We’ve got to raise productivity growth and boost the supply side of the economy, and the government talked about that again today," Holden said.
Low productivity growth often leads to stagnant wages and reduced competitiveness in global markets. If the supply side of the economy remains constrained, the risk of a recession increases as the cost of living rises without a corresponding increase in efficiency, or output per worker.
“11 out of the last 15 quarters have shown negative per‑capita growth”
The distinction between aggregate GDP growth and per-capita growth is critical. When a country experiences negative per-capita growth despite overall growth, it indicates that population increases are driving the numbers rather than increased efficiency or wealth creation. For Australia, this suggests that the average individual is becoming poorer in real terms, creating a fragile economic environment where any sudden shock could more easily trigger a recession.
